FIEM Industries Ltd. share price target

We maintain our Buy rating on FIEM Industries with TP of Rs1,150. We expect FIEM's growth to continue aided by strong growth prospects of its two biggest clients namely Honda Motorcycle and Scooter India (HMSI) and TVS Motor, along with richer product mix. 1QFY19 top-line performance was in-line with estimates, as auto segment posted strong growth. However, pain in the LED business continues. Had it not been for issues in the LED business, performance would have looked much stronger at profit levels. We remain convinced of FIEM's medium-to-long-term growth opportunity as the company continues to remain a strong 2W auto ancillary company. Many 2W OEMs are expected to shift towards LED...

Fiem Industries Ltd (Fiem) reported strong set of numbers in Q4FY18, which were ahead of our estimates. Net revenue and EBITDA grew at 37.3% and 53.6% and reported strong PAT of Rs. 15.3 cr as against a loss in Q4FY17.

Fiem Industries reported good Q3FY18 result, as revenue and Net profit increased by 21.9% and 39.6% respectively yoy. Automotive segment reported healthy growth, whereas LED Luminaries segment continued to disappoint. We are positive on the two wheelers and four wheelers auto segments and expect double digit growth over the next 2-3 years. Fiems foray into LED lamps would drive its growth in the coming years.

Fiem Industries reported subdued Q2FY18 result, as revenue and Net profit increased by 12.2% and 1.9% respectively yoy. Automotive segment reported healthy growth, whereas LED Luminaries segment continued to disappoint.

We maintain our Buy rating on FIEM Industries with TP of Rs1,260. We expect FIEM's growth to continue aided by strong growth prospects of its two biggest clients namely Honda Motorcycle and Scooter India (HMSI) and TVS Motor. 2QFY18 top-line performance was above estimates as auto segment posted strong growth. Had it not been for issues in LED business, the performance would have looked much stronger. Recently FIEM has faced several issues in its LED business, due to an unfavourable business environment. LED business reported a loss at EBIT level due to declining sales. Despite slightly lower visibility in the LED business, we remain convinced of FIEM's...

Revenue from operations for Fiem Industries in Q4FY17 was recorded at Rs.2451 Mn, marking a growth of 4.1% QoQ. Total revenue for FY17 stood at Rs.10,188 Mn, recording a nominal growth of 3.1% YoY. EBITDA margin for FY17 was recorded at 11.6% registering a dip by 132bps YoY. With the automotive segment growing strongly at 10.4% YoY for FY17, LED segment proved to be a drag for overall performance of the company.

Income from operations amounted to Rs 235.36 crs ($34.9m) in Q3, a degrowth of ~9% 9% over the previous year (Rs 258.59 crs/$39.2m) due to demonetization, which impacted the dispatches of two wheeler industry, thereby reducing order flows from Fiem's major OEM customers, mainly from Honda Motors and Scooters (HMSI).. As a result, PAT of Q3 sharply declined by 42.2% (Rs.9.06 crs/$1.3m vs Rs15.67 crs/$2.4m in the same quarter last year); PAT declined by 8.3% in 9MFY17....

Revenue Growth Distorted by Demonetisation Flurry; Long Term Growth Story Intact: Revenue from operations for Fiem Industries in Q3FY17 has declined to Rs. 2354 Mn Vs Rs. 2586 Mn in Q3FY16 marking a drop of 9.0% YoY whereas revenue for 9MFY17 has grown at 10.6% YoY. The bland performance in Q3FY17came as a result of the adverse impact of demonetisation on the market demand of two wheelers across the country. EBITDA margin for 9MFY17 was recorded at12.1% registering a fall of 40bps YoY. We have lowered down our revenue estimates from previous valuation and expect the company to register growth in revenueat a CAGR of 16.8% for the period FY16-19E to reach Rs. 15,758 Mn in FY19E. The company expects to yield better results in Q4FY17E QoQ as demonetization pressure is easing faster.

Growing at an expeditious pace in the first quarter of this fiscal, the two wheeler market seems to have rejuvenated from the dull volume growth in the last fiscal. Hefty scooter sales (growth of 27.1%) and motorcycles sales (growth of 8.9%), which has been a laggard in recent years, backed the 14.3% growth in the two wheeler segment. Such healthy dispatches in the two wheeler industry particularly scooters of Honda proved opportune to Fiem. The company posted a strong growth of 20.5% in its income from operations in Q1FY17 of Rs 245.18 crs ($36.7m)...